SALT Marketplace Mondays

Since its annual meeting in Boise, Idaho, in early August, the MTC has held a series of teleconference calls to discuss the priority marketplace issue list that was developed based on state input. The purpose of these calls is to solicit additional feedback from the states and business community on the issue list for purposes of drafting a white paper with recommendations on each of the issues. During the calls, the MTC has discussed a variety of issues, including:

• Fifteen states have a broad definition of marketplace facilitator, and 19 states plus the District have a narrow definition. Several of the states also have common exclusions from the definition of marketplace facilitator including, advertising, payment processors, food delivery services and online travel companies. The most common exclusion is for payment processors.
• whether marketplace facilitators should have the same rights as retailers. For example, should they qualify for bad deductions, vendor compensation and other price adjustments. The MTC noted that approximately 23 states currently treat marketplace facilitators as retailers.
• liability protections for marketplace facilitators. This discussion centered around which entities were subject to audit and whether states provide protections for marketplace facilitators that rely on information from marketplace sellers. There was also some discussion regarding whether marketplace sellers should be subject to audit.
• information reporting requirements between marketplace facilitators and marketplace sellers. For example, should marketplace sellers be required to provide marketplace facilitators certain information to determine taxability.
• simplified state/local tax rates for remote sellers. For example, some states allow remote sellers to collect at a single combined state and local tax rate. This type of system eases compliance for remote sellers and simplifies the determination of tax rates and taxability issues for every locality.
• registration and compliance for foreign sellers. It was noted that some state systems make it complicated for foreign sellers that are registering. For example, Arizona requires a US-recognized email domain. However, it was also noted that the Streamlined Sales Tax Board permits foreign companies to register through its process.
• locally administered taxes. For example, Colorado has 72 home rule cities that have independent taxing authority. Some of the changes that have been made in Louisiana and Alabama to simplify local tax discussions have also been discussed. For example, Alabama enacted a Simplified Sellers Use tax program that allows sellers to levy a flat eight percent rate statewide, half of which gets distributed to localities.

What’s Next? The MTC is working toward finalizing a draft of its white paper on the marketplace issues before its next meeting in November.